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Monday, 14 March 2016

The Paris climate summit

Canada has consistently failed to deliver, but it’s not too late
for us to make a major contribution at the climate summit in Paris.

The other day I heard an environmental advocate argue that Prime
Minister Justin Trudeau needed to make an ambitious commitment at the UN Paris
climate summit (COP 21) to atone for all the “climate fossil” awards won by our
previous prime minister. I’m not so sure.

Remember when newly elected President Barack Obama won the Nobel
Peace Prize? He hadn’t yet done anything. Apparently the Nobel committee
bestowed the award simply because he was not George W. Bush. In the same vein,
Trudeau will be welcomed because he is not Stephen Harper.

I am not saying, of course, that Trudeau should just go to Paris
and smile. But to make a real contribution, he will need to be brutally honest
about why UN negotiations have failed for over two decades and equally honest
about why Canada’s emission reduction efforts have also continuously failed.

For a start, politicians like Trudeau must see past the “fossil
fuels are evil” rhetoric of some environmentalists. The reality is that coal,
oil and natural gas are fantastic forms of energy that have played a critical
role in improving humanity’s material conditions over the past two centuries, a
period that has seen a doubling of human lifespans in wealthy countries.
Politicians from developing countries know about the wonders of fossil fuels.
How can they not, after witnessing China’s remarkable transformation from one
of the world’s poorest countries to an economic powerhouse in just two decades?
From 1990 to 2010, its economy and its coal consumption grew apace at close to
10 percent a year. As a result, its CO2 emissions grew almost as fast, making
it the world’s largest emitter.

Trudeau must also grasp that reducing greenhouse gas emissions,
especially CO2 from burning fossil fuels, is what policy analysts call a
“global public good.” Within national boundaries, citizens pay for public goods
like roads and national defence by sharing the cost through tax contributions
to government. People don’t agree how much tax each should pay (rich versus
middle class, corporations versus individuals), so government decides. If we
had a global government, it would determine what each country should contribute
to the cost of preventing climate change, with a binding mechanism to ensure
compliance. But we don’t have a global government. So almost 200 countries try
to agree on the contribution of each and on the compliance mechanism to ensure that
contribution. They’ve been unable to agree for over 20 years. They’re unlikely
to agree at Paris.

The main reason they cannot agree is that countries, like
individuals, have a self-interest bias when viewing evidence related to
fairness. Richer countries say they are willing to give a “fair” level of
assistance to poorer countries, such as India, to avoid China’s CO2-intensive
development path, thereby foregoing unrestrained fossil fuel combustion in
favour of hydro, solar, wind, biofuels, nuclear and fossil fuels (if capturing
the CO2). But their idea of a fair level of assistance is dramatically lower
than what poor countries think it should be. So poor countries are unwilling to
accept binding reductions.

These differing perceptions of fairness have plagued climate
negotiations. At Copenhagen, in 2009, all countries agreed that humanity should
limit global CO2 emissions so that the average temperature would increase no
more than 2⁰C, a level
beyond which scientists fear we may pass tipping points that lead to
uncontrolled changes and horrific damages. But politicians at Copenhagen could
not agree on how to parse the global limit into emission limits for individual
countries. So they punted this decision to this year’s Paris meeting — another
way of saying “let future politicians figure this out, because we sure can’t.”

In the run-up to Paris, each country was asked to volunteer a
target for its own emissions in 2030, what are referred to as “intended
nationally determined contributions” or “INDCs.” (Each COP seems to create
fresh terminology for old concepts. In this case, an INDC previously was a
“voluntary commitment” or a “nonbinding emission target.”) Over 150 countries
have set INDCs. Not surprisingly, however, analysis of these shows that even if
all countries achieved their target, the resulting emissions path would rocket
past the 2⁰C limit.

So there is the conundrum.
Countries are willing to set nonbinding emission targets. But these targets
fail to meet our 2⁰C climate
objective. Developing countries might be willing to tighten their targets if
developed countries paid their costs of foregoing fossil fuels. But so far the
amount on offer is not close to what developing countries say they require.

So what is likely at Paris? And what can Canada contribute?

Continued stalemate that fails to achieve 2⁰C is one possible outcome, although this might be dressed up to
appear like a success. This dress-up could include patting developing countries
on the back for their first INDCs, substantial funding commitments from
wealthier countries to help them deflect slightly from the fossil-fuel path,
and a hopeful-sounding concluding document that talks about future processes
for reviewing and tightening the INDCs of developed and developing countries.

A more promising outcome might already achieve some tightening
and co-ordination of the INDCs of wealthier countries — perhaps through
agreement on a minimum carbon price that each country should apply domestically
— and an agreement by developing countries to tighten their INDCs in order to
receive substantial (but still not sufficient in their eyes) financial
transfers from wealthier countries. The sum of the combined INDCs of all
countries might still exceed the 2⁰C path, but it
would represent enough of a game-changer that the Paris negotiators could
legitimately claim some success.

This may sound promising. But how can we be sure that it truly
represents a game-changer in the global climate effort? In particular, do the
INDCs really indicate what each country’s emissions will be in 2030?

This is where Canada can make a contribution. The reason, sadly,
is that our prime ministers have been making INDC-type commitments for almost
30 years — with complete failure. We’re experts at setting voluntary targets
and failing to achieve them. So we should be experts at spotting others who try
the same thing.

In the late 1980s, Brian Mulroney set a voluntary target for
Canadian emissions in 2000. We missed it by a country mile. But by then
Mulroney was long gone. In 1997, at Kyoto, Jean Chrétien set a voluntary target
for 2010 emissions. He too was long gone when we blew that target. Then, in
2007, Harper set a voluntary target for 2020. He too won’t be around for the
day of reckoning, but the Auditor General already noted in 2013 that we won’t
achieve his target (or even his 2009 revised softer target for 2020). One of
Harper’s last acts was to set our INDC target for 2030 earlier this year (a 30
percent reduction from 2005 levels). Amazingly, he kept a straight face when
making the announcement.

Unfortunately, it gets worse. Not only did we set INDC-type
targets, we actually implemented major policy initiatives that were promised to
achieve the targets. The big challenge was to give each new initiative a unique
name; hence, the Green Plan (1990), the National Action Program (1995), Action
Plan 2000, the Climate Change Plan for Canada (2002), Project Green (2005),
EcoEnergy (2007) and Turning the Corner (2008). Once he got a majority in 2011,
Harper dispensed with the farce of creating new climate initiatives, although
he saw no need to admit that his targets were fiction as they were for a future
date probably beyond his political shelf-life. Like his predecessors, he was
certainly right about the timing.

People who assess energy-economy policies, like me and my
colleagues around the world, agree on why every single one of Canada’s policy
initiatives failed. Information and incitation campaigns, labels on fridges and
cars, a few subsidies to energy efficiency and wind turbines, and a host of
Rick Mercer commercials will not really reduce emissions. The only policies
that reduce emissions are: (1) a rising carbon tax, or (2) a declining hard
emissions cap (probably with tradable permits), or (3) increasingly stringent
regulations on emission-causing technologies and fuels, or (4) some combination
of these three types of “compulsory policies.” This is all that is needed.
Everything else is fluff, including government spending programs.

If anything good is to come from Canada’s three-decade
climate-policy charade it is the lesson that voluntary INDC-type targets are
delusional unless intimately tied to one or two of the three compulsory
policies listed above, and independent experts confirm that their level of
stringency ensures achievement of the target. Canada needs to insist at Paris
on the establishment of an independent policy review mechanism that reports
annually on the likely achievement of each country’s INDC, given the policies
that country is implementing. This would be a substantial contribution.

Trudeau should also tell
the world that a reformed Canada now intends to be a model for effective
climate policy that achieves targets. This won’t mean a lot at this stage,
since people know about our track record. But the global climate effort is a
long-run project. If Canada produces domestic climate policy that, by design,
is guaranteed to achieve its 2030 target, this will garner a lot of weight in
the years to come. Although Stephen Harper made it sound difficult to hit a
national emissions target, it isn’t. You simply mandate a national cap on
emissions that equals the 2030 target. Then you roll up your sleeves and
allocate the cap among provinces or economic sectors, including a mechanism to
ensure regional fairness in hitting the cap. Finally, but most importantly, you
delegate the task of monitoring and review to an arms-length, highly visible
oversight institution, like the Auditor General, and perhaps delegate some
regulatory authority to ensure government achieves its legislated commitments,
as California does with its Environmental Protection Agency. (I will elaborate
in a subsequent article focused on domestic climate policies.)

While this focus on mechanisms for determining whether domestic
policies will achieve the INDC promises would be an important contribution by
Canada at Paris, it is not sufficient. Canada should also argue for
international mechanisms and actions that are realistic — as I noted at the
outset — in view of the attractiveness of fossil fuels and the
global-public-good nature of the challenge. Just as our domestic climate policy
must strongly incentivize the use of technologies and fuels that do not emit
CO2, the same is required of the global climate policy mechanisms issuing from
Paris.

Thus, Trudeau should push at Paris for the creation of a
transparent policy review process that provides an annual report card on the
effectiveness of each country’s climate policies. And he should insist on a
direct link between that policy performance and the slate of financial
incentives offered by the international community. For example, funding support
for developing countries should be tied to the effectiveness of their domestic
climate policies, as indicated by their annual report card. And countries with
failing grades — whether developed or developing — should be threatened with
and eventually subject to trade measures, such as higher tariffs on their
goods. Some people don’t want to talk about trade measures. But those who are
serious about an effective global effort know that we cannot avoid this
discussion. Indeed, the Waxman-Markey clean energy bill, which was passed by
the United States House of Representatives in 2009 but not the Senate, included
a mechanism to increase the effective tariff on imports from countries whose
climate policies lacked the stringency of the US policy.

Finally, while supporting the effort in Paris for comprehensive
international mechanisms that apply to all countries, Trudeau should recognize
the value of separate bilateral and multilateral agreements between
jurisdictions willing to show real climate policy leadership. These “clubs” can
provide models that other countries might one day emulate or join. In 2005, the
Europeans constructed an emissions cap-and-trade system for industry. While
naysayers denigrate this policy, it is working fine and will be tightened
rather than eliminated as new European countries join. And thanks to Quebec
joining California’s cap-and-trade in 2014, and Ontario about to join next
year, Canada has a golden opportunity to extend this system nationally, uniting
35 million Canadians with 35 million Californians in a cross-border
cap-and-trade system applied to virtually all fossil-fuel-related greenhouse
gas emissions. This 70 million-strong club could be a significant force for
change — and other American states could well join.

You may notice that I have
omitted one issue. I have not discussed the specific target Trudeau should
commit to at Paris. Hopefully my reason for this omission is obvious. While the
target should of course be achievable, it’s the policies that count. That
message is the most valuable contribution Canada can make at Paris.